Once you’ve built a successful business—or really, even before that point—it is important to make sure you have the legal structures in place to protect both your business and your family, in the unfortunate event that something happens to you. A solid business succession plan and a comprehensive estate plan are the two most important pieces of a smooth transition.
Business Succession Plan
A business succession plan ensures that your company continues uninterrupted if you are unable to continue managing the business for any reason, including retirement or disability. Your company can benefit from the tactful use of different tools, including life insurance plans, installment buy outs, and advisory roles arrangements. If your business is family owned, effective planning requires that you decide which family members will assume future managerial roles and how decision making will be distributed during and after the transition period. Many of the details of a succession plan are documented in changes or amendments to operating agreements and buy-sell agreements for LLCs (or various corporate documents if your company is structured as a corporation). A business succession plan also will interact with an estate plan in the event of death. The failure to make a clear succession plan before the fact can lead to contentious disputes (and even drawn-out litigation) among friends and family members who are left without clear instructions on your wishes for the business.
An estate plan includes a minimum of five documents:
- general power of attorney,
- HIPAA authorization,
- health care power of attorney, and
- living will.
These documents work together to make sure your last wishes are fulfilled—and that your family can focus on grieving and celebrating life, instead of burdensome administrative details. The two documents that interact most closely with the business succession plan are the will and general power of attorney. The will designates to whom you are leaving your ownership interest in the business. The general power of attorney gives certain named person(s) the ability to handle your affairs (like paying bills through the company bank account) if you are unable to do so for any reason.
The last piece of the puzzle of protecting your business includes intellectual property (IP). If your business relies on any form of IP, making sure that property is protected from competitors is often of paramount importance. Whether a patent, copyright, or trademark (or some combination of the three), intellectual property is often key to a company’s growth and ongoing success. It can be a difficult and daunting task to properly fill out the trademark applications, or to draft and negotiate licensing contracts.
Certain types of IP work require an academic background in science, in addition to a law degree. We are not scientists at Spengler & Agans, but can help you decide whether your company should pursue IP protections and refer you to a specialist in the appropriate field, if that is the right path for your company.
Looking for assistance to protect your IP? Contact us here.